Mutafis v. Erie Ins. Exchange, 83-1421

Decision Date05 March 1984
Docket NumberNo. 83-1421,83-1421
Citation728 F.2d 672
PartiesBetty J. MUTAFIS, Appellee, v. ERIE INSURANCE EXCHANGE, a Pennsylvania Corporation, Appellant, and Erie Insurance Company, a Pennsylvania Corporation, Defendant.
CourtU.S. Court of Appeals — Fourth Circuit

Appeal from the United States District Court for the Northern District of West Virginia, at Clarksburg. Charles H. Haden, II, Chief Judge; (C/A 81-0044-C(H)).

James R. Watson, Clarksburg, W.V. (Steptoe & Johnson, Gordon H. Copland, Steptoe & Johnson, Clarksburg, W.V., on brief), for appellant.

David J. Romano, Clarksburg, W.V. (Young, Morgan, Cann & Romano, Clarksburg, W.V., on brief), for appellee.

Before WINTER, Chief Judge, and MURNAGHAN and SPROUSE, Circuit Judges.

HARRISON L. WINTER, Chief Judge:

Erie Insurance Exchange (Erie) appeals from a judgment entered against it in an action under West Virginia's Unfair Trade Practices Act. The judgment was entered in favor of Betty J. Mutafis, a former policyholder of Erie, on the verdict of the jury awarding Mutafis compensatory damages of $15,000 and punitive damages of $20,000. The case arose from an Erie employee's act of placing a memorandum in Erie's claim file stating that Mutafis was "associated with mafia very heavily." The district court denied Erie's post-trial motions to grant a new trial, to grant judgment n.o.v., and to grant a remittitur. Mutafis v. Erie Insurance Exchange, 561 F.Supp. 192 (N.D.W.Va.1983).

In this appeal Erie advances contentions that the statute does not apply to the facts established by the proof, that the statute does not permit a private cause of action, that, even if the statute does apply, the common law defense of qualified privilege may be invoked despite the apparently contrary ruling of the district court, that the statute as applied in this case violates Erie's first amendment rights, and that the statute if it permits recovery of punitive damages is unconstitutional as a violation of Erie's first amendment rights. 1 Erie's contentions about the meaning and effect of the statute, whether it may serve as the basis for a private cause of action and what defenses, if any, may be successfully pleaded to such a cause of action have not been the subject of adjudication by West Virginia's highest court. With regard to Erie's constitutionally-based contentions, we note that we should not decide constitutional issues unless they inescapably require decision. Erie's contentions based upon the federal constitution, however, depend in large part on the resolution of those issues of the meaning and application of the West Virginia statute that have not yet been the subject of definitive adjudication. Accordingly, we certify to the West Virginia Supreme Court of Appeals, pursuant to W.Va.Code Ann. Secs. 51-1A-1 et seq. (1981 Replacement Vol.), the facts and questions which follow.

I.

Plaintiff was a former policyholder of Erie. Her automobile was stolen in 1979, and three weeks later, the automobile of her cousin, Vincent J. Oliverio was also stolen. Plaintiff's loss was investigated by Erie's adjuster, Richard Kimble. After a relatively brief period of time, plaintiff's automobile was found stripped and burned, and shortly thereafter her loss was paid.

The loss of Oliverio's automobile was also investigated and adjusted by Kimble. Kimble received information from a third party as to the likely whereabouts of the Oliverio vehicle, and as a result payment to Oliverio was delayed. When Oliverio inquired about the delay, Kimble told him that a cousin of Oliverio insured by Erie also had had a car stolen and that Erie was now investigating "your involvement" in the thefts. It is not disputed that the cousin to whom reference was made in the conversation was the plaintiff. Subsequently, Oliverio's vehicle was found stripped and burned, and when no evidence could be developed involving Oliverio in the theft, his claim was paid.

Despite payment of his claim, Oliverio sued Erie for defamation and under West Virginia's "insulting words" statute, W.Va.Code Ann. Sec. 55-7-2 (1981 Replacement Vol.). In the course of discovery in that lawsuit, Oliverio obtained access to a confidential memorandum prepared by Kimble's supervisor, Glenn W. Laque, which became the principal basis of plaintiff's claim. The memorandum, addressed to Leonard Chaffee of Erie's Home Office Audit Department, was a report of an aspect of Kimble's investigation of the Oliverio loss, and it contained this postscript:

Please reference for your information to file # W017415, this is a relative and associated with mafia very heavily, although may have NO connection whatever.

The file that was referred to in the postscript was the file on plaintiff's loss.

It is established for purposes of decision that any suggestion that plaintiff had any association with the Mafia is untrue.

After Laque prepared the memorandum, he placed it in a sealed, red, confidential envelope, enclosed the confidential envelope in another envelope, and mailed it from his office in Parkersburg, West Virginia to the head of Erie's audit department in Erie, Pennsylvania. Erie's audit department has responsibility for monitoring suspicious or fraudulent property losses. After receiving and reviewing the memorandum, the head of the audit department placed a copy in plaintiff's file.

As before stated, the existence of the memorandum was disclosed as a result of court-ordered discovery in Oliverio's suit against Erie. After plaintiff was advised of the existence of the memorandum, she sought, through counsel, an apology from Erie and a purging of any untrue statements from her file. Erie denied possession of any unfavorable statements about plaintiff. At some time after the Oliverio Trial, Erie had clipped and destroyed the postscript in the copy of the memorandum in plaintiff's file.

Plaintiff's suit against Erie alleged causes of action for slander, libel and insulting words, but the district court granted directed verdicts on these counts, apparently on the basis that...

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3 cases
  • Mutafis v. Erie Ins. Exchange
    • United States
    • West Virginia Supreme Court
    • March 28, 1985
    ...is the common law defense of qualified privilege an available defense to the action? The opinion of the United States Court of Appeals, 728 F.2d 672, to which the certified questions refer is, again, published here as Appendix Before answering the certified questions, it is important to poi......
  • Volvo Trademark Holding v. Ais Const. Equip.
    • United States
    • U.S. District Court — Western District of North Carolina
    • February 16, 2006
    ...the federal courts to decide constitutional issues only when necessary to the resolution of a controversy[.]"); Mutafis v. Erie Ins. Exchange, 728 F.2d 672, 673 (4th Cir.1984) ("[W]e note that we should not decide constitutional issues unless they inescapably require Where the dormant comme......
  • Mutafis v. Erie Ins. Exchange
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • October 30, 1985
    ...Unfair Trade Practices Act, we certified the issues of state law to the West Virginia Supreme Court of Appeals. Mutafis v. Erie Insurance Exchange, 728 F.2d 672 (4th Cir.1984). Therein we set forth the facts, and we need not repeat In an opinion filed March 28, 1985, the West Virginia court......
2 books & journal articles
  • West Virginia. Practice Text
    • United States
    • ABA Antitrust Library State Antitrust Practice and Statutes (FIFTH). Volume III
    • December 9, 2014
    ...W. VA. CODE § 47-11A-9. 181. Id . § 46A-7-113. 182. Mutafis v. Erie Ins. Exch., 561 F. Supp. 192 (N.D. W. Va. 1983), question certified , 728 F.2d 672 (4th Cir. 1984), certified question answered , 328 S.E.2d 675, 681 (W. Va. 1985), answer to certified question conformed to , 775 F.2d 593 (......
  • West Virginia
    • United States
    • ABA Archive Editions Library State Antitrust Practice and Statutes. Fourth Edition Volume III
    • January 1, 2009
    ...CODE § 47-11A-9. 175. W. VA. CODE § 46A-7-113. 176. Mutafis v. Erie Ins. Exch., 561 F. Supp. 192 (N.D. W. Va. 1983), question certified , 728 F.2d 672 (4th Cir. 1984), certified question answered , 328 S.E.2d 675, 681 (W. Va. 1985), answer to certified question conformed to , 775 F.2d 593 (......

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